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Overview

Supermarket Income REIT (LSE: SUPR) acquires supermarket sites that form a key part of the future model of grocery in the United Kingdom. SUPR listed in July 2017 raising gross proceeds of £100 million. Two follow-on equity fundraisings in November 2017 and May 2018, raised an additional £85 million in total gross proceeds, both oversubscribed.

SUPR aims to provide long-term RPI-linked income, from institutional grade tenants and the potential for capital growth through active asset management. To date, six supermarkets have been acquired around the UK (4 Tesco, 1 Sainsburys, 1 Morrisons). All supermarkets in the portfolio are omnichannel supermarkets – these are high quality supermarket properties, which operate both as physical stores and online fulfilment centres.

SUPR paid a quarterly dividend in the 12 months ending 30th June 2018, totalling 5.5p per share and has set a target of 5.63p per share for the 2018/19 financial period.

Atrato Capital is the Company’s Investment Adviser.

www.supermarketincomereit.com

Directors

  • Nick Hewson (NE Chair) – co-founder, CEO & Chair of Grantchester Holdings plc, NED at Redrow plc.
  • Vince Prior (Snr Ind Dir) – former Head of Property Investment at Sainsbury’s.
  • Ben Green (Principal Atrato Cap.) – completed £4 billion of supermarket sale & leaseback transactions at Barclays, Lloyds and Goldman Sachs
  • Steve Windsor (Principal Atrato Cap.) – former partner at Goldman Sachs specialising in finance and risk management.
  • Steven Noble (Atrato Cap.) – 9yrs at Lloyds. Negotiated and executed >£240m of Supermarket Property transactions.
  • Natalie Markham (Atrato Cap.) – previously CFO at Macquarie Global Property Advisors Europe

Financials

P&LJune 2018
£~000
Rental income8,942
Admin & other expenses(2,097)
Operating Profit2,764
Profit for the period620
BALANCE SHEET2018
£~000
Investment Properties264,900
Cash & cash equivalents2,239
Total Assets268,211
Bank borrowings88,099
Total liabilities91,465
Net assets176,746

Peer Group

  • Secure Income REIT (AIM: SIR): generates long term income from real estate investments.
  • Target Healthcare REIT (LON: THRL): invests in purpose built care homes.
  • Impact Healthcare REIT (LON: IHR): invests in healthcare real estate opportunities
  • Tritax Big Box REIT (LON: BBOX): invests in very large logistics warehouse

Major Shareholders

  • Quilter Cheviot- 13.73%
  • Thames River Capital – 12.42%
  • Premier Fund Managers – 9.64%
  • Smith & Williamson – 7.23%
  • West Yorkshire Super Fund – 6.55%
  • Hargreave Hale – 5.55%
  • Miton AM – 5.32%
  • River & Mercantile – 5.30%

Macro Indicators

IGD Forecasts:

  • UK Supermarket expenditure to grow from £106bn in 2018 to £113bn in 2023
  • Online grocery spending to grow from £11bn to £17bn in the same period
  • 74% of online grocery orders are fulfilled in supermarkets

Media Coverage

Citywire (Sep 2018)
“Supermarket fund with 5.5% yield eyes third share issue.”

Shares (Apr 2018)
“Supermarket Income REIT invests £210.5m in first quarter, declares dividend”

Broker Coverage

Goodbody (July 2018):
“We are forecasting continued expansion of SUPR as the portfolio and income streams grow. While the benefits of an inflation-link on long-term leases will drive NAV upside and continued dividend growth…This will be driven by the unique asset selection skills of management and knowledge of the market.”

Stifel (Apr 2018)
“Year to date, Supermarket REIT’s shares have risen 1%, out-performing the sector which is down 4%. We believe that the shares are supported by the high dividend yield of 5.4% (versus the REIT average of 3.9%), which we forecast to grow in line with inflation, backed by long unexpired leases that are all RPI-linked, and with a high quality tenant covenant.”

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